The global bond rout picks up steam this morning, with the 10-year Treasury yield up another 5.3 basis points to 2.441%, the 10-year Bund up 4.8 bps to 0.324%, and 10-year yields in Italy, Spain, and the U.K. higher by similar amounts.

Rolling around the minds of fixed-income investors is incoming Treasury Secretary Steven Mnuchin's consideration of locking in still-historically-low interest rates through the issuance of 50- or 100-year government bonds. At the pace rates are climbing, he better hurry.

If the previous period was characterized by increasing globalization, relatively innocuous fiscal policies, and sluggish domestic growth (along with low inflation and falling bond yields), says Dalio, a Trump administration is likely to see decreasing globalization, aggressively stimulative fiscal policy, and increased growth (along with rising inflation and bond yields).

There's a really good chance, he says, that we're at a point of one of those major shifts - think the 1970-71 shift from the low inflation of the 60s to the runaway prices of the 70s, or the 80s shift back.

The bottom line is that things won't be good for bonds, and then the question becomes at what point does that start to pressure other asset prices.

"I would like to come back as the bond market, you can intimidate everybody," famously said James Carville in the early 90s as every fiscal move made by his boss thought to be at all inflationary was met with a selloff in long-dated government paper.

The bond vigilantes are seemingly back, and apparently telling the president-elect to go easy on the deficit spending - taking the yield on the 10-year Treasury from 1.70% Tuesday night to as high as 2.28% earlier this morning.

"Trump has all these big spending plans, but he doesn’t have the revenue to pay for it,” says Allianz's John Bredemus, in a quote that could have been lifted from Pete Peterson, circa the early 90s.

Bond funds have seen nearly $200B of inflows this year versus outflows of $60.5B for equity funds, but the sharp rise in rates post-Labor Day spooked some as the fixed-income funds experienced outflows for the first time in ten weeks.

Looking closer at the bond fund category finds money moving favoring shorter-term maturities rather than further out on the curve. Whether it's a trend or not remains to be seen as rates at the long end have reversed sharply lower this week.

At 1.61%, the 10-year Treasury yield has about returned to its level at the start of September.

The extra yield that investors demand to own 30-year Treasurys rather than five-year notes, a measure of the yield curve, increased for a ninth straight day today. That’s the longest streak since 2012.

Traders are favoring shorter maturities, anticipating the Fed will continue to keep interest rates in check, potentially stoking inflation and eroding the value of debt maturing decades in the future.

The last time the yield curve steepened this quickly was Aug. 2012. At the time, primary dealers were offloading billions in 30-year bonds to the Fed as part of its debt-buying program.

"This bond story is not dead by any means," says Western Asset Management's Robert Abad. American growth and inflation are likely to remain "muted," and thus a bet that U.S. interest rates will remain structurally low "is a good trade," he says.

"It is a natural disposition" of investors to take some profits, says Templteton's John Beck, reminding bonds put in a big rally prior to the current rout. "Where is the catalyst that is immediately going to change the interest rate path?"

Included in the report is an amazing chart showing real returns by the decade in developed bond markets. Prior to the 1980s, decades of negative returns were well mixed in which those of positive returns across every economy. From 1980 to present, though, there's not one period of negative returns for even one developed-economy bond market. Not one.

The best case scenario as domestic financing markets start to struggle will be some form of capital controls. One might argue this is already occurring through new regulations all-but-forcing banks, insurers, and pension funds to buy domestic paper for reasons other than value.

Worst case is a "hard break" in which a major country defaults on its debt.

Neither scenario is likely to be favorable for the owners of long-dated fixed-income assets.

Opining on the markets and the economy in his latest webcast, Jeff Gundlach says the Fed is becoming increasingly irritated with Bloomberg's World Interest Rate Probability (WIRP) function. The central bank, he thinks, wants to show its independence from traders by hiking rates even though WIRP is below 50%. Typically, it would take a WIRP reading of above 70% to see a Fed move.

Hartnett, who turned bearish on government paper just ahead of April 2013's "taper tantrum," says a pickup in U.S. inflation or global economic growth could be the catalyst that sparks "taper tantrum II."

JPMorgan's Oksana Aronov agrees: "You have a tiny amount of upside, and then this tremendous amount of downside ... We are in the field of assessing risks - that’s not a risk that should be attractive to any investor.” In the JPMorgan Strategic Income Opportunities Fund, where she works as a strategist, cash is up to 18% of assets, and sovereign debt down to less than 1%.

According to Hartnett and team, she's not along. Money managers have raised cash levels to a near-15-year high of 5.4%; with investment-grade bond fund managers' cash levels up to 12% - the most since 2009.

Continuing to benefit from the trend toward low-cost, index-tracking funds, Vanguard Group pulled in $148B in the first half of the year, topping last year's record H1 haul of $140B.

The fund giant sports four of the top 10 ETF inflow recipients so far this year, the S&P 500 Index Fund (NYSEARCA:VOO), the FTSE Developed Markets ETF (NYSEARCA:VEA), the REIT Index Fund (NYSEARCA:VNQ), and the Total Bond Market Index Fund (NYSEARCA:BND).